Wayne State University

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457(b) Retirement Savings Plan

The Plan is established under Section 457(b) of the Internal Revenue Code.  The Plan offers several KEY ADVANTAGES:

Double Your Retirement Savings: The employee contribution limit for the 457(b) Plan  is separate from the current 403(b) Plan, so you can defer $17,500 in pre-tax dollars (or $23,000 if age 50 or older) and this is in addition to the limit under the 403(b) Plan.

No Early Withdrawl Penalty: The IRS does not impose the 10% penalty if you withdraw your funds before you are age 59-1/2; however, you may only make withdrawals from the 457(b) Plan after you terminate your employment with WSU.

Same Quality Investment Choices: The 457(b) Plan offers the same TIAA-CREF and Fidelity Investments as the current WSU 403(b) Plan. The TIAA-CREF Traditional Account under the 457(b) Plan is a GSRA contract, so there are no surrender charges when you take a lump sum cash option within 120 days.

Frequently Asked Questions

Eligibility

Who is Eligible to make Contributions to the Plan? 

Any employee who is eligible for the 403(b) Plan is also eligible for the 457(b) Plan.

Eligible employees are those who are employed by WSU in an eligible employee classification who normally work 20 hrs per wk OR have at least 50% appointment OR union employees whose bargaining contract permits participation.

The following groups are not eligible to participate in the Plan:  Student assistants, Graduate assistants, and  members of Building Trades Union (Eclass SK).

When am I Eligible to make Employee Contributions to the Plan?

You may start your Employee contributions any time after your date of hire in an eligible classification.

What is the Maximum amount of Employee Contributions?

For calendar year 2013 the amount is limited to $17,500/$23,000 (under age 50/over 50). This maximum includes any Employee Contributions made to plans sponsored by other employers. These limits are indexed each year by the Internal Revenue Service and are IN ADDITION to the similar limits under the 403(b) Plan.

Wayne State University also limits the percentage amount you can contribute for any one paycheck to 80% of gross pay (considering both 403(b) and 457(b) plan contributions). This is necessary to ensure that you have compensation remaining to cover other employee benefits costs.

Plan Features
 

Start Date for Employee Contributions Any time after date of hire
Employee Contribution Amount 1% minimum, in increments of 1%, to the
maximum under IRS rules.
Fully vested at all times.
University Contribution Amount

None.

Fully vested means these amounts cannot be forfeited, even if you terminate your employment with WSU.

Investment Options

TIAA-CREF

This investment carrier offers variable and fixed annuities (called the guaranteed option, or TIAA Traditional account) as well as 5 mutual funds and 10 lifecycle funds. The Group Supplemental Retirement Annuity (GRSA) is the investment vehicle for the Traditional Account. The Plan number is 103168.

FIDELITY INVESTMENTS

This investment carrier offers 150+ mutual funds, including money market, stock and bond funds and an array of pre-mixed Freedom Funds. The Plan number is 84976.

Loan Information

There are no loans available from the 457(b) Plan. 

Unforseeable Emergency Distribution

You may withdraw from the Plan in the event of an unforeseeable emergency, which includes the following:

  1. Sudden and unexpected illness or accident of the participant or of a dependent of the participant
  2. Loss of the participant’s property due to casualty
  3. The need to pay for the funeral expenses of the participant’s spouse or dependent
  4. Imminent foreclosure of or eviction from the participant’s primary residence
  5. The need to pay for medical expenses and cost of prescription drug medication
  6. Other similar  extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant

 Tax Impacts

  • Generally cash withdrawals are subject to a 20% Federal income tax withholding. The Early Withdrawal Penalty (10%) does NOT apply.

Cash Withdrawal Information

Your Employee Contributions are made on a pre-tax basis. Thus, Federal and state income taxes are deferred until you withdraw your vested account balance as cash. Any investment return on your contributions are tax-deferred, and also subject to tax upon cash withdrawal, as shown on the chart below.

Events that permit Cash Withdrawals

 

Early Withdrawal Penalty
before Age 59-1/2

20% Federal Tax
Withholding

Severance from employment with the University, at any age

No

Yes

Unforeseen Emergency

No

Yes

 10% Federal Tax Withholding
Generally cash withdrawals are subject to a 20% Federal income tax withholding. The Early Withdrawal Penalty (10%) does NOT apply.

Forms of Payment

Once you terminate your employment from Wayne State University, you make elect any of the following distribution options:

  • RETAIN YOUR WSU ACCOUNT- Leave your vested account balance with your current Investment Carrier (inside the WSU 457(b) Plan) until some later date. Later you can take cash withdrawals or arrange to annuitize your vested balance.
  • ROLLOVER TO YOUR NEXT EMPLOYER’S PLAN  - Roll your vested account balance into another qualified plan of your new employer.
  • ROLLOVER TO AN IRA- Roll your vested account balance into an IRA.
  • CASH WITHDRAWAL- Elect a cash income option (subject to 20% Federal income tax withholding and 10% Early Withdrawal Penalty if you are age 59-1/2 or less).
  • ANNUITY OPTION-  Elect an annuity option from TIAA-CREF. When you “annuitize” your account balance, you may select regular cash payments in the form of a single life annuity, joint and survivor annuity, fixed period certain annuity. There is no requirement that you elect an annuity as an option if your funds are invested with TIAA-CREF.

For more information please contact benefits@wayne.edu
 

 Last updated: 4/5/2013